What makes a PPP successful?
18 March, 2005

Warren Hatter, Head of Research, NLGN and Stephen Reeve, University of Brighton
PFI/PPP 2005

When the ink on the contract has dried, the real business of partnership delivery starts to take place. Most, if not all analyses of PFI/PPP projects focus on the run-up to contract completion, or stress either an essentially political opinion, or some form of static input-output, cost-benefit approach. A new study however into the psychology of operating and managing within the new partnership structures suggests that there is now an urgent need for all sides in the partnership dynamic to address the skills requirement for effective delivery.

Working together, the University of Brighton Business School and the New Local Government Network were able to ask key practitioners within the partnership field some fundamental questions. Using the innovative research vehicle of the ‘Practitioner Forum’ (see appendix), researchers were able to extend to a group of managers the necessary conditions for confidentiality which allowed practitioners from all areas within partnership to talk candidly about their experience. The results have been rather revealing, and provide a new perspective on the implications of actually directing and managing the successful delivery of partnership outcomes.

Reflective discussion within the Forum demonstrated a range of issues commonly understood and experienced by the practitioners across a range of industries and contexts, and which do not often see the light of day in usual PPP discussions. The research team, working with the practitioners, interpreted and developed a schema which might be applicable across different forms of partnership and of value to both sides in the procurement process.

One of the more immediate findings was the extent to which managers charged with responsibility for successful partnership outcomes felt themselves to be in a very lonely place. Constrained by commercial sensitivities, the purchaser/provider divide and the very novelty of PPP situations, practitioners often feel they are alone in experiencing the rigours of this new environment. By extension, they also feel they lack the support and safety net of more conventional professional and managerial networks.

The research team discovered that this was part of a stressful combination reported by practitioners. Within this, the lack of conventional navigation often sat side by side with an unexpectedly deep emotional commitment to partnership working which had taken managers completely by surprise. Partnership managers had worked out for themselves a kind of ‘rule of thumb’ which showed that the more emotional energy, commitment and negotiation they put in during early stages of operations, the more smoothly and successfully partnership working evolved later. The downside of this however, was the sheer energy and emotional commitment necessary which was far greater than expected and much in excess of that experienced in ‘non-partnership’ managerial life.

This began to make sense to the researchers when it was placed together with certain other findings to generate a cross-sectoral dynamic which they labelled Beyond Contract (and which subsequently became the title of their final report). Here was a new space, an innovative perspective on the culture and infrastructure of managerial working life which explained much about the phenomena described by the practitioners.

Explaining the sense of loneliness, or case idiosyncrasy, together with the lack of familiar navigational beacons, Beyond Contract explores the managerial space between conventional ‘command and control’ and conventional contractual ‘arm wrestling’. In essence the very space occupied these days by so much of PPP, PFI, inter-public partnership and multi-agency partnership.

Finding themselves within this new space where old solutions do not work, partnership managers are having to fill the gaps with a new array of skills, which centre heavily on coordination, negotiation, persuasion, diplomacy and change management. Perhaps being more familiar to the Foreign Office than traditional contractors or procurement officials, such skills are some way removed from the norm of programme and project management experience previously gathered or learned in training. Committed managers within partnership are often not in a position to order or instruct across a professional or organisational boundary. Neither do they wish to be perceived as an old fashioned contract manager by reverting to the letter of the contract. Instead such individuals forge new communications channels, bring to bear powers of persuasion, demonstrate commitment to joint aims, all of which place heavy demand on energy levels.

Under the umbrella of Beyond Contract, together with the high emotional commitment, new skills, and novel circumstance, the Brighton/NLGN collaboration placed another specifically partnership-oriented finding – this concerned a dynamic sense of process, familiar to practitioners yet relatively unexplored in the more static public discussions held at strategic and policy levels.

While it has been anecdotally acknowledged within PPP circles, the Forum explicitly emphasised the prevalence and importance of hand-over within a process exemplified by key stages, to the overall success of partnership.

There was a strong feeling of linear narrative making sense of the development of partnership through a ‘phased’, connected set of discrete events over time. The experience of partnership implied several stages, where not only did the stage change, but hand-over between discrete groups or teams often occurred.

Three stages were deemed to be distinct by the practitioners, and acknowledged within the policy community. The first stage, Vision comprises a set of activities that take place up until the signing off of a contract. Early discussions, market research, ‘testing out’, from invitation to negotiate through to best and final offer and invitation to tender. This stage also includes the communication and promotion of the partnership agreement – often the major thrust after signing but before actual implementation engagement begins.

The second stage, Action essentially concerns the change management aspects of moving into implementation of the partnership contract. Major restructuring, staff transfer, new roles, generating and managing excitement and expectation, process innovation and transformation, handling shock and coping with resistance are experienced. This kind of change implementation activity begins to wind down as processes and people settle into new routines. The establishment of new protocols and experimental flexing of the new governance system feature here. This period is turbulent as the change processes co-exist with the beginning of the substantive processes of the partnership agreement, before decaying away. Elements of the contract will be called into question and negotiation around ‘meaning’ will occur

Finally, the partnership matures into Evolution where stability, trust, joint working, maintenance and acculturation are the main defining principles of this stage. There is an expectation that this stability and trust create the conditions for innovation and value adding, as partners have come to know each other and are comfortably familiar with the operating systems in use. The anticipated outcomes of the vision stage should be delivered here, with cumulatively increased efficiency, as the partners have learnt over time.

Between each stage lies a transition zone, where the dominant features of one stage gradually give way to the early dominant features of the next. The practitioners specifically focused on the issues which occur around hand-over points, where the partnership ‘mission’ (or critical parts of it) are literally handed over from one team to another. Once again, the nature of boundaries and innovative practice came to the fore as experience was shared about handing over from one group of professionals to another – from negotiation teams to implementation teams, from change management ‘champions’ to process groups, from one group in an organisational hierarchy to another; across organisational, sectoral, professional and political boundaries.

These points were identified as critical. They are where the initially negotiated partnership begins to drift, as the DNA of the original mission starts to mutate in the hand-over from one team to another. As well as being specified as one of the major features on the operational horizon for managers within partnerships, attempting to manage the identification, understanding and rectification of such drift was deemed to be one of the dominant issues for operational managers.

Last but not least, the practitioners attempted to distil their learning and experience into a set of principles and case examples which would aid other organisations, directors and managers working in the new partnership environment. At the launch of the final report, Tim Stone, International Chairman of KPMG LLP, told the audience: “With PPPs, the genie is out of the bottle. We have to now find a way of moving thought leadership away from standard PPP contracts and towards focussing on how best to get the delivery aspects right. The authors of this report should be congratulated on a fantastically thoughtful piece of work – the first of its kind – and I hope the Treasury takes note”.

Warren Hatter is Head of Research at the New Local Government Network and Stephen Reeve is Programme Director of the MA in Change Management at the University of Brighton Business School

Beyond Contract: what makes a PPP successful? is published by NLGN and available, price £21.25 (inc p&p) from network@nlgn.org.uk or 020 7357 0152.

appendix 1

The Practitioner Forum

The Practitioner Forum at the University of Brighton Business School is drawn from all sides in the PPP/PFI operational arena and represents an attempt to generate valuable ‘insider insight’ as to the dynamics, problems and successes of partnership structures. The various fields represented include construction, defence, education, environment, health, IT, local authorities, social services, transport (both rail and tube) and youth services.